In an article by Jack Guttentag for Inman News (http://www.inman.com/buyers-sellers/columnists/jackguttentag/why-good-faith-estimate-needs-overhaul), Mr. Guttentag is asking for an overhaul on the Good Faith Estimate document that gives a potential borrower the estimate of costs when buying or refinancing a home. Mr. Guttentag feels the GFE in it's current state confuses the borrower more than it helps them and that the GFE should be an easy to read document that a borrower can use to shop for the best rates and costs on their future home loan.
Believe me, if anything would make it easier on a borrower I'm all for it. We make borrowers sign so many papers now at closing, it is ridiculous. The borrower doesn't ever have trouble with the note or the actual mortgage document ("6.5%, 30 year fixed. I understand"), it is all the disclosures or the CYA docs we make them sign that make the borrower's head spin.
The problem with Mr. Guttentag's position is that there are too many variables that affect mortgage costs. Most of the costs we have are what I call "pass through" costs (appraisal, title work, flood cert, recording, survey...etc.). We get the invoice and pass the cost on to the borrower. The other costs are fees that vary such as processing fee, underwriting fee and the title company's closing fee to name a few.
Closing costs are costs that are generated by the borrower when obtaining home financing. But what about escrows? (funds collected at closing by the lender so the lender can pay the taxes and insurance). Are the escrows a "cost"? Not really, but if the borrower needs to pay this at closing, you better show this on the GFE. I have seen competitor's GFE's and the escrow section can be hazy at best.
And what about real estate costs? These are not "mortgage" costs but your borrower needs to know that they may need a couple thousand dollars for "tax prorations" (refunding to the seller for taxes already paid). Most loan officers won't put this cost on their GFE's because it is not a mortgage cost and they want to look "cheaper" than the competition.
I'm sure I have lost deals because I go out of my way to try to put all the costs on my GFE. I'm sure the competition has showed those buyers their GFE's without all the costs which makes my GFE look like my costs are way out of the ballpark. But I don't like surprises and I'm sure my clients don't either. Do I want to make a phone call that sounds like this: "Mr. Client, I'm sorry. You need $3000 more to close. Ooops!". I don't think so.
When Mr. Guttentag finds a way to get all the mortgage costs the same, let me know. Because it's a "Good Faith Estimate", not a "Good Faith Written In Stone No Matter How Much The House Costs And What The Taxes Are". Loan Officers need to do a better job on disclosing all the costs.
See if you can get regulation for that, Mr. Guttentag.
If you have any comments on this article, I would love to hear what you have to say!
Feel free to comment below.
Thanks for reading!
Dan Tenchall
Great Lakes Mortgage Funding
For FREE Mortgage tips, Mortgage Calculators,must have articles and much more please visit my website!
Michigan Mortgage Rates
(586) 532-0600
dan@glmf.com
Monday, July 28, 2008
Friday, July 18, 2008
Do We Even Have A Choice?
How about this article from CNBC? http://www.cnbc.com//id/25735696 The article discusses how "glum" (how bad does the economy have to be to use the word "glum") consumers have started to save more money and pay down their current debt. I am assuming the reason for this is because consumers aren't sure how much money their going to need in the future. Will gas go up to $10 a gallon? Will vegetables trade higher than gold?
We were caught off guard by gas going over $4 a gallon but we won't be fooled again. We would like to believe that gas just can't go any higher but we still don't know why gas went up in the first place so we have to believe that it can still go even higher.
'"Most of the planned declines in debt and increases in savings are intended as a precautionary measure in the face of a deepening economic downturn," Richard Curtin, director of Reuters/University of Michigan Surveys of Consumers, said in a statement on Friday ahead of Tuesday's release of the poll" from a quote in the article. Which in English means people are scared and now do not have clue if they will have enough of money to survive.
Nobody saw this coming. And now consumers are gun shy and cannot trust anything they see or hear about the economy. With rising gas and food prices, foreclosures, layoffs, banks going out of business everyday and lenders needing a bailout the only thing that consumers can do is take cover by reducing their debt and saving whatever they can.
When you're not sure the floor is going to cave in when you take your next step, you better have the money to fix it when it does.
Hopefully, the step can wait until we have enough cash saved.
If you have any comments on this article, I would love to hear what you have to say!
Feel free to comment below.Thanks for reading!
Dan Tenchall
Great Lakes Mortgage Funding
For FREE Mortgage tips, Mortgage Calculators,must have articles and much more please visit my website!
Michigan Mortgage Rates
(586) 532-0600
@glmf.com
We were caught off guard by gas going over $4 a gallon but we won't be fooled again. We would like to believe that gas just can't go any higher but we still don't know why gas went up in the first place so we have to believe that it can still go even higher.
'"Most of the planned declines in debt and increases in savings are intended as a precautionary measure in the face of a deepening economic downturn," Richard Curtin, director of Reuters/University of Michigan Surveys of Consumers, said in a statement on Friday ahead of Tuesday's release of the poll" from a quote in the article. Which in English means people are scared and now do not have clue if they will have enough of money to survive.
Nobody saw this coming. And now consumers are gun shy and cannot trust anything they see or hear about the economy. With rising gas and food prices, foreclosures, layoffs, banks going out of business everyday and lenders needing a bailout the only thing that consumers can do is take cover by reducing their debt and saving whatever they can.
When you're not sure the floor is going to cave in when you take your next step, you better have the money to fix it when it does.
Hopefully, the step can wait until we have enough cash saved.
If you have any comments on this article, I would love to hear what you have to say!
Feel free to comment below.Thanks for reading!
Dan Tenchall
Great Lakes Mortgage Funding
For FREE Mortgage tips, Mortgage Calculators,must have articles and much more please visit my website!
Michigan Mortgage Rates
(586) 532-0600
@glmf.com
Wednesday, July 2, 2008
Is There Light.....?
In this clip from CNBC News (http://www.cnbc.com//id/25498530), the article explains that some cities are now experiencing a rise in home sales as banks are selling off more and more foreclosed homes. Some increases in home sales have risen over 10%.
What does this mean? I'm serious. What does this mean? I know this is a good thing. And as someone in the mortgage business, this makes me happy. More homes selling equals more buyers need mortgages to buy these houses. (We know. No stated income, no subprime, no 0% down, no adjustables. Yeah, we got it.)
We are now looking for any hope that is out there. Just some sign that the real estate market is improving. What ever the sign is, we'll take it. It is getting harder and harder to find the good news. Here in the Detroit area, I don't expect good news for awhile. Detroit, anchored by the auto industry, is the first to enter a recession and the last to get out of one. I'm no economic genius, but when gas prices skyrocket, it can't be good for car sales. (I also don't understand that if you make a product, shouldn't you have a major interest in the product that makes your product go? This will be discussed in another blog. Another long blog.)
So the good news is that some of the massive inventory of homes are being sold. The less inventory, the more that sellers can command for their homes. The more they sell their homes for, the more the appraised values in their neighborhood will go up. The more the appraised values go up, the more people will be able to refinance because now maybe they won't be upside down. It's all good.
But....... I believe there are a ton of properties out there that are on the door step of foreclosure. And while good news is good, we know that there are so many things that control our economy that we aren't sure what will fix it. This is a war with many fronts. And no one has an answer because that answer has many parts. Who's in charge of the economy?
So we wait. And wait.
But what exactly are we waiting for?
If you have any comments on this article, I would love to hear what you have to say! Feel free to comment below.
Thanks for reading!
Dan Tenchall
Great Lakes Mortgage Funding
For FREE Mortgage tips, Mortgage Calculators,must have articles and much more please visit my website!
Michigan Mortgage Rates
(586) 532-0600
dan@glmf.com
What does this mean? I'm serious. What does this mean? I know this is a good thing. And as someone in the mortgage business, this makes me happy. More homes selling equals more buyers need mortgages to buy these houses. (We know. No stated income, no subprime, no 0% down, no adjustables. Yeah, we got it.)
We are now looking for any hope that is out there. Just some sign that the real estate market is improving. What ever the sign is, we'll take it. It is getting harder and harder to find the good news. Here in the Detroit area, I don't expect good news for awhile. Detroit, anchored by the auto industry, is the first to enter a recession and the last to get out of one. I'm no economic genius, but when gas prices skyrocket, it can't be good for car sales. (I also don't understand that if you make a product, shouldn't you have a major interest in the product that makes your product go? This will be discussed in another blog. Another long blog.)
So the good news is that some of the massive inventory of homes are being sold. The less inventory, the more that sellers can command for their homes. The more they sell their homes for, the more the appraised values in their neighborhood will go up. The more the appraised values go up, the more people will be able to refinance because now maybe they won't be upside down. It's all good.
But....... I believe there are a ton of properties out there that are on the door step of foreclosure. And while good news is good, we know that there are so many things that control our economy that we aren't sure what will fix it. This is a war with many fronts. And no one has an answer because that answer has many parts. Who's in charge of the economy?
So we wait. And wait.
But what exactly are we waiting for?
If you have any comments on this article, I would love to hear what you have to say! Feel free to comment below.
Thanks for reading!
Dan Tenchall
Great Lakes Mortgage Funding
For FREE Mortgage tips, Mortgage Calculators,must have articles and much more please visit my website!
Michigan Mortgage Rates
(586) 532-0600
dan@glmf.com
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